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Colombia and Ecuador: Two Different Countries, Two Mining Futures

by Rachel Godfrey Wood
They may have torn relations and be at constant loggerheads, they may have wildly contrasting political cultures and leaders, but Colombia and Ecuador do have at least one thing in common: they both appear destined to become major mining countries. They also have both been slow developers on the mining front, lagging behind countries like Peru and Chile. In 2008, while mining accounted for 7.3 percent of Peru’s GDP and 6.7 percent of Chile’s, the figure for Colombia was just 1.5 percent, and even lower for Ecuador. Both countries, though, have significant mining potential. Colombia, with its three Andean mountain ranges, has significant quantities of coal, gold and nickel. As for Ecuador, large quantities of gold and silver were discovered there in 2007. Colombia plans to quadruple its mining exports by 2019, a feat which would allow it to join the ranks of the continental leaders, Peru and Chile.

Extractive Industries and Development
Mining, like all extractive industries, has a dubious record in developing countries. Because it is based on extracting a non-renewable resource, it is, by definition, a non-sustainable activity. This means that any benefits that it might bring are ultimately temporary. Furthermore, from an economic perspective, it can create many problems for exporting governments. It makes public finances dependent on international prices which can fluctuate wildly. Even when it does bring in revenues, it can still have adverse effects, such as making a country vulnerable to “Dutch Disease,” whereby an inflated exchange rate actually impedes the development of other industries. Moreover, bringing such large amounts of money into a nation has been shown to increase incentives for corruption and erode institutions. The clearest cases of such phenomena have occurred in oil exporting countries, which invariably show high levels of inequality, corruption and poor institutions along with income spikes that don’t endure.

Moreover, it is no secret that, on countless occasions, mines have had disastrous effects on natural habitats. They require vast amounts of water to become operational and can very quickly contaminate water sources and rivers. The repercussions are even worse from “open-pit” mines, which create vast gashes in the landscape and can have far more damaging environmental implications for the host nation. By contaminating soils, they can undermine agriculture and thereby threaten the local community´s health and livelihood. In many cases, this harm lasts much longer than the short term economic booms provided by mining activities, such as the increased revenue or job creation. At a global level, mining for fossil fuels like coal is a key contributor to global warming.

And yet, despite all these negatives, the potential bonanza represented by mining is still too tempting for any government, left or right, to pass up. Mining represents big money in government coffers, and few governments can resist that. Colombia and Ecuador entertain very different visions of the use of mining for their respective political projects and economies. Colombia sees mining as a major source of foreign investment, which is expected to grow, while Ecuador views mining as a means of bringing in crucial revenue to finance social programs and offset an expected depletion of their already modest oil reserves. In spite of their differing goals, both countries agree that the need to exploit their resources is non-negotiable.

Colombia: Mining’s Dirty Legacy
Colombia does have some experience with large scale mining, but it has not been pretty. There have been major operational mines in the departments of Cesar and La Guajira for almost 30 years. Between 1995 and 2007, the transnational Drummond extracted 160 million tons of high quality coal from Cesar, in which time they were also responsible for considerable environmental damage (leading to local resistance as children and old people began to contract respiratory conditions). As with many lucrative activities in Colombia, Drummond has been implicated in its share of human rights controversies, and it currently stands accused of paying paramilitaries to assassinate union leaders in 2004. There have also been disputes about the amount of royalties reaching the local municipalities. In spite of this a horrendous record, Drummond has been rewarded with an environmental license to open up new mines, including El Descanso, Rincón Hondo and El Hatillo. Across the country, mining has been highly linked to forced displacement and frequently faces strong local opposition. For example, the Embera indigenous people are presently embroiled in a dispute against Muriel Mining in Antioquia.

Ecuador: Little Experience, Lots of Potential
Ecuador, on the other hand, is virtually the only country in Latin America which has not yet embarked on the path of large scale mining. As its oil reserves decline, however, it has become increasingly apparent that it also has the potential to become an important mining exporter. The growing awareness of Ecuador’s mining potential (which first came to light when the Canadian company Aurelian discovered 13.7 million ounces of gold and 22.4 million ounces of silver in 2007) comes at a crucial historic moment: Ecuador’s population, after years of revolts and toppled governments, had just elected the leftwing economist Rafael Correa Delgado, who promised to rewrite his nation’s constitution and build a new economic and political model. The potential benefits and dangers that lurk under the country’s subsoil have come to symbolize a very real division within the coalition that put Correa in power. The discovery has driven a wedge between those indigenous and environmentalist organizations who fiercely reject orthodox developmentalist (desarrollista) logic and ultimately believe the country would be better off without any large-scale mining and those who see the wealth as an opportunity to finance the transition towards a new “social” economy and not as a curse. The former block managed to insert symbolic clauses into the new constitution guaranteeing the “rights of nature” and the right to the “buen vivir” (a translation from the Quichua term Samak Qawsay, meaning “good living” – a kind of local alternative to the western material concept of what “development” should mean). As the constitution was drawn up, mining activity was stalled, at least until the government could come up with a law to clarify the new mining regime in the country. It did so in January, with the new “Ley de Minas,” a controversial measure which clearly allows for the expansion of mining in Ecuador.

Rafael Correa: Hardly a Friend of the Social Movements
Correa’s antipathy towards the indigenous and environmental organizations that oppose mining is only thinly veiled. Although he has persisted with his unprecedented initiative of not exploiting the ITT oilfield in return for international compensation, there is little evidence of Correa extending his environmentalism to the point of rejecting the mining industry. He fell out with the environmentally-minded Alberto Acosta, former president of the Constituent Assembly, more than a year ago, over severe differences regarding the desirability of extractive industries. He has repeatedly branded opposing organizations as being “dumb leftists” and “infantile extremists,” even going so far as to claim that they are supported by the right-wing opposition. In comments which Uribe (or Alan Garcia) would surely have been proud to have authored, he has said that “the nascent left, indigenous, and ecological movements are starting to rise, having meetings to promote an uprising against the mining companies.” Following the passing of the Ley de Minas, Correa warned that “with the law in hand we will not allow these abuses, we cannot allow uprisings, which block paths, threaten private property, and impede the development of a legal activity: mining.” Leaving Ecuador´s resources unexploited, reckons Correa, would be a crime, turning the population into “beggars sitting (literally) on a gold mine.”

Water or Gold for Colombia?
In its frenzied bid to become a major mining competitor, the Colombian Government has, via the Colombian Institute of Geology and Mining (Ingeominas), handed out exploration permits potentially affecting 15 national parks and 48 percent of the country’s páramos. The páramos are an ecosystem unique to Colombia, Ecuador, Venezuela, and Peru, and are crucial for the preservation and management of water in these countries. Mining is not by any means the only activity which threatens them (agriculture and cattle also pose ecological dangers), but it can have the most severe effect. Evidence of this can be found at the Rabanal páramo in the Boyaca Department, where mining activity has caused significant damage to upwards of 10,000 square meters of terrain, according to the organization Corpoboyaca. Such activities led to a campaign by environmentalist organizations to exclude the páramos from all further mining activities. In their campaign, the environmentalists won the support of the then Attorney General, Edgardo Maya, who warned of the threat posed to the páramos by mining, announcing that “the time has come to decide what is more important for the country: the extraction of coal, gold and silver or the production of clean water for its inhabitants.”

Colombia’s New Mining Code: Despite advances, páramos still under threat.
On the face of it, such concerns have been incorporated into the recently revised mining code, which prohibits mining from páramos and other protected areas. Such a move has been treated with cautious optimism by environmentalists. They know very well that in Colombia, as in the rest of the continent, the difference between environmental laws and their application can often be significant. It remains to be seen whether this exclusion of the páramos will be implemented by the Ministry of Mines and Energy when it comes to handing out further exploration permits. In the meantime, the new code was not by any means perfect. It did not, for example, include any prohibition against the type of mining operation that Anglogold Ashanti has planned for La Colasa Mines in Cajamarca, Tolima. This mine, in a forest reserve, represents a crucial area for water sources but is not in itself a protected area or national park.

The other big drawback to the new mining code was the legalization of mining dragas (dredgers). These dredgers have long been accused of catastrophic environmental damage in areas such as the Choco Department, as they essentially suck up entire river beds in search for precious minerals and metals. Allowing them in the new mining code runs contrary to any kind of serious claim of environmental management or integrity as such technology could easily accelerate erosion, thereby increasing the risk of land collapses. Moreover, there is still no requirement for companies to obtain an environmental license in order to carry out exploratory activities. Although the Ministry of Environment claims that exploration rights do not mean exploitation rights, companies often carry out damaging activities even at this initial stage. For instance, Anglogold Ashanti made perforations in Cajamarca without having any exploitation rights. Therefore, despite the welcome decision to prohibit mining in the Colombian páramos, it is still far too early to say whether Bogota will have the long term commitment to the country’s water and environmental security to prevent the mining companies from destroying the country’s natural heritage. The twin goals of becoming a world leader in mining exports and protecting the environment appear to be totally contradictory, especially when we consider the government’s deep commitment to maintaining “investor confidence.”

Ecuador’s New Mining Law: No Consultation, No Right to Veto, and Definitely no Rights of Nature
Due to President Correa’s previously mentioned stance on the need to increase mining activities in the country, it was no surprise when the Ecuadorian Government unveiled its new mining law in January. As expected, it favored transnational mining companies and paved the way for future large scale mining operations across the country. Perhaps the most coherent criticism has come from Correa’s former ally, Alberto Acosta, a man with close relations to groups like the indigenous organization CONAIE and Acción Ecológica. The first infringement, he says, was the failure to consult the indigenous communities likely to be affected, as mandated by Article 57 of the constitution. Secondly, the mining law exploits an ambiguity in the constitutional text by saying that all further consultations with indigenous communities will be dealt with on the basis of Article 398, which states that in the event of majority opposition from local communities, the decision will go to “a higher administrative body.” Clearly, Correa is not willing to make Ecuador the first country to genuinely respect the UN’s Declaration on the Rights of Indigenous Peoples which guarantees the right of indigenous communities to veto such projects. Although the Constitution prohibits activities that would infringe on concepts like the right to water and the right to a clean environment, the mining law gets around this by referring to mining as a “public utility,” i.e., a self-evident good for the nation which supersedes any damage done at a local level.

According to the mining law, once a concession has been made, the respective company will “be able to” come to an agreement with the actual owners of the land as to the obligations and compensation necessary for the deal, but without being held to any specific obligations. According to CONAIE President Marlos Santi, Correa has done what any so called “neo-liberal” government would do: deliver indigenous territories to transnational companies without hesitation.

Expected Environmental Impacts
Mining is, by definition, an environmentally destructive process. It requires perforating the surface, and removing vast quantities of residual rocks and minerals. Such residual material can thereafter cause significant problems. In Ecuador for example, if the Canadian company Aurelian were to exploit the 13.7 million ounces of gold in Fruta del Norte, it could generate as much as 400 billion kilograms of residual waste material. Moreover, mining operations threaten water sources, not least because they require vast amounts of water to extract the resources. The proposed mine in La Colasa, Tolima, for example, would consume 630 to 950 million cubic metres of water, according to the Dutch consultation company, IKV Pax Christi. This water would then become contaminated, and would find its way back into the same water sources, upon which 70,000 people depend. This has an impact not only on human consumption, but on other societal activities, such as agriculture, cattle ranching and tourism. Both countries are rich in natural water resources and facing an impending scarcity crisis as climate change intensifies. Neither can afford to put the long term fate of their water supplies in danger in return for a short term boom in public finances and a handful of jobs. Moreover, the direct human impact of mining can have grave implications for the health of people living locally. Due to the emission of poisonous gases and other agents, populations living near mining activity frequently suffer. One example of this is in Oroya, Peru, where 99 percent of children are said to have dangerously high levels of lead in their bloodstreams. Obviously, such agents can also poison water supplies and soils, leading to the further degradation of surrounding ecosystems. This occurs even when the best technology is used, like in California, where the Sacramento River has become contaminated by mining. Such effects are often unavoidable and can last centuries. According to Acosta, there is simply not one case of a large scale mine in the tropics which has not caused such detriment.

Acosta laments that, despite Government claims to the contrary, the new law is not strong enough to ensure sufficient environmental standards.

Is Responsible Mining Possible?
Many within the mining industry talk about “sustainable mining.” That, of course, is impossible. As we have seen, the very definition of mining is the extraction of a non-renewable resource. Despite this, the mining industry and the governments which depend on it are at pains to point out that current technology programs can prevent the type of scenarios suggested by Alberto Acosta. In Ecuador, for example, President Correa has repeatedly stated his belief that Canadian companies are the best in the world, that they can extract minerals with only minimal environmental impacts and to the benefit of local communities. In a bid to undermine organizations like the CONAIE, he even arranged for a group of indigenous Canadians to tour Ecuador, lecturing on all the benefits they have received from mining operations in their home country. As with oil development, it is rarely the case that local communities are unanimously against exploitation. On the contrary, there is usually a great variety of opinions. In the Department of Zamora Chinchipe, for example, the Shuar Federation there has signed an agreement with the mining multinational Corriente for job training, capacity building, and socio-environmental projects.

Mining pollutes, even in so-called “best practice” cases
However, as mentioned above, there is still a need for caution. While it may be the case that, as the mining companies claim, they have considerably improved their technologies and that environmental groups often fail to mention this, it should still be pointed out that even examples of “best practice” mines have come under severe criticism. The company Rio Tinto, for example, is being sued for failing to protect surface and ground water mine at its “best practice” copper mine in Wisconsin. If this could occur in the United States, where regulations and penalties are normally tough, it is clear that countries like Colombia and Ecuador are still taking a big risk when they allow such companies onto their territory. Even in Correa’s beloved Canada, the record is mixed. In May, the Canadian Federal Court ordered the Government to “stop withholding data on one of Canada’s largest sources of pollution – millions of tonnes of toxic mine tailings and waste rock from mining operations throughout the country.” Correa’s touting of the country’s record with indigenous people could easily backfire too. In an article for Upside Down World, Jennifer Moore highlights that there are numerous Canadian indigenous people who have had negative experiences with the very same mining companies being supported by Correa, and these people are also visiting Ecuador to publicize this.

Conclusion: Two Different Countries, Two Mining Futures
It is clear that, despite their ideological differences, many of the dilemmas facing Colombia and Ecuador are similar, and at this moment in time, it seems that the probable outcomes are as well. Ecuador might invest revenues in impoverished local communities, and will probably secure an ever increasing state role in activities to ensure the country’s sovereignty over its resources. But from an environmental perspective, the paradigm remains the same: extract the resources and spend the money. As a general concept, it is easy to criticize but hard to show alternatives. No government in the world has shown itself willing to sacrifice significant resources on an environmental basis, least of all the developed countries in the north. Even those nations which profess to be combating climate change, like Great Britain, have had no qualms about opening up new mines. Moreover, few alternative ways of generating funds currently exist for developing countries. The only real proposal was made by the Ecuadorian Government regarding the ITT oilfield, and that has recently seen a pathetic response from the developed world. Environmental groups advocate a move towards a totally different “post-development” model which prioritizes the fulfillment of rights and wellbeing but not limitless growth. It is an attractive concept, but it is hard to see Colombians, Ecuadorians, or indeed any population signing up for such a future en masse. No matter how destructive mining has been in the past, or how little it has contributed to national economies in a sustainable way, new governments will always have a need for the revenue mining generates, and will always argue that they can do it better than those in the past. In light of the recent massacres of indigenous people in Peru for opposing oil development, observers of Colombia and Ecuador would be well advised to sit tight and expect an unsettlingly familiar and steady increase in environmental damage, community divisions and socio-environmental conflicts in these countries.

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